Washington Gov. Jay Inslee, seated, gestures after he signed a measure that changes the structure of a new business and occupation tax surcharge levied on some professional services and technology companies in order to create a more stable revenue stream for the state’s college grant program, Monday, Feb. 10, 2020, in Olympia. The program guarantees aid to college students at or below the state’s median family income, based on a sliding scale that increases the grant as family income drops. (Rachel La Corte/The Associated Press)

Washington Gov. Jay Inslee, seated, gestures after he signed a measure that changes the structure of a new business and occupation tax surcharge levied on some professional services and technology companies in order to create a more stable revenue stream for the state’s college grant program, Monday, Feb. 10, 2020, in Olympia. The program guarantees aid to college students at or below the state’s median family income, based on a sliding scale that increases the grant as family income drops. (Rachel La Corte/The Associated Press)

College grant funding bill signed into law

Inslee inks first new measure of this year’s legislative session

  • Wednesday, February 12, 2020 6:31am
  • Politics

By Rachel La Corte

The Associated Press

OLYMPIA — Gov. Jay Inslee has signed the first new law of this year’s legislative session, a measure that changes the structure of a new business and occupation tax surcharge levied on some professional services and technology companies to create a more stable revenue stream for the state’s college grant program.

The tax is to be put into a special account for higher education programs, with the largest beneficiary being the Washington College Grant program. That program guarantees aid to college students at or below the state’s median family income, based on a sliding scale that increases the grant as family income drops.

Students from families of four that make $97,000 a year are eligible for the grant.

But current projections showed that the demand was going to outpace the original funding. The new bill adds more than $200 million on top of the original $773 million the tax was expected to raise through mid-2023, according to the state Department of Revenue.

“Not having enough money would have put the Washington College Grant program at risk, and our students certainly deserve better,” Inslee said before signing the bill Monday.

Under the new law, fewer professional service businesses will pay the surcharge because it would only apply to companies that have yearly gross income of more than $1 million. But businesses above that threshold would pay a 1.75 percent surcharge, rather than the 1.5 percent in the current law.

State Rep. Mike Chapman, D-Port Angeles, has said most small businesses will see a tax cut. Chapman co-sponsored the bill in the House and spoke for it on the House floor. His District 24 colleagues — Rep. Steve Tharinger, D-Port Townsend, and Sen. Kevin Van De Wege, D-Sequim — also voted for the legislation.

Sen. Jamie Pedersen, D-Seattle, the bill’s primary sponsor, said the new surcharge will affect fewer than 15,000 businesses and applies only to those defined as “advanced computing” companies, such as Microsoft or Amazon. The earlier legislation affected more than 80,000 companies.

Advanced computing companies are defined as firms that make computer software or hardware, provide cloud computing services, manage online marketplaces or online social networking platforms.

Pedersen said he wanted to focus the majority of the revenue collection for workplace education investment on businesses that “by their nature, rely on highly educated professionals.”

The new bill also streamlines the surcharge on advanced computing businesses that have worldwide gross revenues of more than $25 billion. Current law calls for the surcharge to double if that revenue is more than $100 billion. The bill has a single rate of 1.22 percent over the standard B&O tax, and it caps the surcharge at $9 million.

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Peninsula Daily News Executive Editor Leah Leach contributed to this report.

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